Bryan Morris of Seven Peak Capital on scaling from a Lowes credit card BRRR to multifamily and private credit - EP21

In this episode of The Wealth Clock podcast with Steven Weinstock I sit down with Bryan Morris founder of Seven Peak Capital. Bryan shares how his first BRRR deal used a Lowes credit card and sweat equity and how he later scaled into multifamily partnerships and a private credit strategy while keeping a top performing role at Salesforce.

What we cover
* The BRRR playbook and how the first refinance created momentum
* Moving from single family to multifamily and why scale matters
* Equity deals versus private credit and how returns and risk differ
* How first position lending with conservative LTV can protect capital
* Balancing a demanding W2 career with building an investment platform
* How passive investors can partner with operators for access and tax benefits

If you want a clear path from your first deal to institutional quality opportunities this conversation gives you the steps the trade offs and the mindset.

Connect with Bryan
LinkedIn https://www.linkedin.com/in/bryanmorris7/
Instagram https://www.instagram.com/bryan7morris
YouTube https://www.youtube.com/@SevenPeakCapital
Twitter https://twitter.com/bryanmorris7
Facebook https://www.facebook.com/bryan.r.morris

🎙 About Steven Weinstock
Steven Weinstock is a real estate investor and founder of WeCapital and the Goethals Capital Fund. Since 2001, he has built a diverse portfolio of residential and multifamily assets while helping investors access passive income through strategic real estate opportunities. On this podcast, he shares real-world insights on investing, capital raising, and what it really takes to build and scale in today’s market.

📩 Want to invest or get in touch?
Visit: www.WeCapitalX.com

📱 Connect with Steven:
LinkedIn: www.linkedin.com/in/stevenweinstock1

Instagram: https://www.instagram.com/wecapitalx/
YouTube: https://www.youtube.com/@TheWealthClockPodcast

Transcript

Steven Weinstock: 0:01

Hi everyone, and welcome back to the Wealth Clock with Steven Goethals. I've been investing in real estate for over 20 years. Started off with single family homes, moved on to multi-family properties, and recently launched my own real estate investment fund. This is a show where operators, founders, closers share what really works in real estate and in business. This episode is sponsored by my company, we Capital and the Goethals Capital Fund, where we buy properties in cash. We eliminate mortgage risk upfront. We lock in some deep discounts on the purchase, and then we refinance in order to scale. Today I'm excited to sit with Bryan Morris, founder of Seven Peak Capital. A private equity real estate firm that helps high income professionals build passive income and financial freedom through multifamily investments. What makes Bryans story unique is that while he's running Seven Peak, he's also spent nearly a decade as a top performing enterprise sales executive at Salesforce he manages strategic banking relationships. His real estate journey started back in 2016 with a single family BRRR deal, BRRR. For some of you who don't know what that is, we'll get into that. Funded partly with the Lowes credit card, and he has since scaled into multifamily and private fund structures. Bryan, welcome to the show.

Bryan Morris: 1:39

Thank you Steven, and thank you for that intro. That was a hell of an intro there. I appreciate it and I'm excited to, to be on and talk to you today. Okay. First,

Steven Weinstock: 1:46

Since it was in the intro, just tell us what BRRR is. It's a famous online, everybody knows what BRRR is, but maybe not everybody listening. What is the BRRR method? BRRR And there might be a few Rs that I'm missing. Yeah, but what is the third? Yeah, I think I

Bryan Morris: 1:59

lost r's I think there's four, but it's buy, renovate. Refinance, rent and repeat. So it's a simple analogy for buying a house that's needs some work. And so the second, the first R would be renovate and then you're gonna refinance it after the value, after the renovations has gone up, then you're gonna put a renter in and then you're essentially gonna repeat that process.

Steven Weinstock: 2:23

Got it. And you did that with a Lowe's credit card and I guess some small down payment on your part.

Bryan Morris: 2:30

Yes luckily this was in Pennsylvania. I'm from Bethlehem, Pennsylvania, and this was in 2016 and this was a month or two after reading Rich Dad Poor Dad, which I feel like is the typical start for a lot of multifamily or real estate investors. And it's this epiphany of I should buy a rental property. And so that's exactly what I did. I was living in Harrisburg at the time, working for Pepsi, and I had some savings maybe. 15 to 20,000. So that property in itself, we identified, it was a pre-foreclosure property that was listed for 88,000. We found it on market with a realtor order. And I was able to get it under contract and actually put 20% down. And I think total closing down payment and closing costs came around $20,000. So it wiped me for everything I had. But hey, I had my first house and I got started, right? So then I was like, now how the hell am I gonna buy materials to, to flip this thing? And that's where the Lows credit card came in. It was about 12 to $15,000 in renovation costs. But luckily my dad's a contractor, so we put in about eight to 10 months of sweat equity and work ourselves.

Steven Weinstock: 3:38

Wow. So it took you about eight to 10 months from the closing until you were able to make this rent ready?

Bryan Morris: 3:44

Yes. Yeah. So essentially we were doing it after work. We were doing it on the weekends with the time we could find, so I was still working on Pepsi, my dad was still working his full-time job as well as my mom. And, we did it when we could and so we ended up, doing it over the, those few months and yeah, got it completely renovated and it turned out to be a really nice property and so I was able to actually cash out refinance after that. So the refinance aspect,

Steven Weinstock: 4:09

when you purchased that first property, did you have in mind that it would take eight to 10 months or whether is.

Bryan Morris: 4:16

Yeah, I, we didn't really have a timeline. I think ideally we wanted to get it done at six. But we did everything from new flooring, sheet, rock, roof really top to bottom on that house. We even painted the exterior ourselves, which we did everything. And it came out to be, a really nice project. And, I still have a lot of great memories with. My family and thinking back to how that started, my whole real estate journey and it means a lot to me. I still have the property today. It rents out for a great price and, there's really solid tenants in there. So it's what started and was the whole building blocks of everything. But yeah, it, it always takes a little bit longer than you expect, I think. When, if you're dealing with permitting or contractors, but we were doing all the work ourselves when we can get it done. So it took a little bit longer, but at the end of the day, I was living back with my parents at the time in town I didn't really have a timeframe where we needed to get it done in a certain amount.

Steven Weinstock: 5:07

What was the amount that the first tenant was paying in rent? God,

Bryan Morris: 5:14

I want to say it was like 1200. I think my mortgage at the time was only like 7 95 or something.'cause I, I had very little amount debt on the property. But when I. Refinanced. I put 20% down and my mortgage initially, the total principal balance was about 68,000 from what I remember. When I refinanced and got it reappraised I initially bought it for 88. I got it reappraised for 140,000 after the renovations. Wow. And so I took a new mortgage for one 12 and so that's what gave me capital again. Essentially I got, took about $40,000 in cash out from that cash out refinance, which I used to buy my next property.

Steven Weinstock: 5:51

Was your plan to continue buying more and more or did you think this was a one and done?

Bryan Morris: 5:57

The plan was always to buy more. Once I got the first one under my belt, you get hooked to it. But a lot of people I talk to or a lot of people in the industry, I guess when they first start is, Hey, I'll buy a single family house. I'll rent it out. I'll buy another one next year. I'll rent it out and repeat. And they start to build a portfolio and they might get two or three houses in and realize that's not really a scalable way to do it. So when I actually cash out, refinance from my, that first deal in that house, I found a three unit multifamily property that was put on the market that day. I remember it was a Saturday morning and I reached out to my realtor right away and I said, this looks like a great property. The guy, the previous owner was a mom and pop owner and he owned it for 30 years. It's exactly what you're looking for. First time he put it on the market. And I used actually my. Cash out, refinance as a down payment, FHA loan to, to take down that three unit about that, that I believe it was 10 to 12 months later that we close on. That.

Steven Weinstock: 6:52

Was this property, was the first property you bought right near where you live or were you seeking further out?

Bryan Morris: 6:58

Yeah, so it was in the Lehigh Valley, it was in Bethlehem. So it's from where I'm I'm originally from when I bought the property, I was actually living in Harrisburg, but I bought it, so I moved back home. And I was still working for Pepsi at the time. But yes, there, I was familiar with the market. The market is about an hour north of Philadelphia, an hour and a half, hour and 45 minutes west of New York. So the market itself was growing pretty substantially. There was a lot of development happening. A lot of expansion on the highways, malls, different things that were happening within the valley. And I've been fortunate to ride that appreciation in the value of my property over the last, I guess 10 years, nine years since starting that one. But yeah, the it's in the town and so very familiar with the area and the comps and the and then that's where I wanted to focus on.

Steven Weinstock: 7:41

Yeah, 2016 was a great time to start in the business. And you had some upward momentum to help you over there. Yep.

Bryan Morris: 7:49

And a low interest rate. I got 3.8, 3.875. Locked on both of them. Now I've refinanced a couple times, but yeah, to have those fixed rates low. And you look back now at where rates are, you're fortunate to have that type of debt on the properties.

Steven Weinstock: 8:06

Yeah, when I started I started in 2001. I bought a single family home about 45 minutes from where I live. I live in New York New York City. And New York City was untouchable. So I was looking at different markets and I settled on central Jersey, Trenton, New Jersey. And my goal was to buy just one. I was working a corporate job and I figured let me buy one house. I will pay it off over 30 years and over the next 30 years with everything being paid off, it would be like a bonus 401k, I could sell it when I'm retired. But after, two or three months of collecting rent the numbers really just started clicking in my head, even though I had these calculations beforehand. When you're in it you really, you are really in it. And I figured, why not two? Why just one and it was off to the races after that and it's addicting. Oh yeah. Oh yeah. Now you mentioned you're from Pennsylvania. When you start at seven peak Capital. Are you investing in Pennsylvania or are you investing nationally, or are you picking a few markets? What's your

Bryan Morris: 9:17

Yeah. So I guess fast forward I moved to New York City also so didn't, okay. I live in Chelsea, so in Manhattan and. Moved to New York in 2018, and that's really when I got more exposure to multifamily commercial and understanding the world of really commercial real estate. How it, it's much differently financed, right? The aspects and the underwriting and everything that goes into commercial was far different than what I knew so far in the residential space, right? I was buying the single family a three unit. It was all 30 via fixed rate debt. Easy to understand. That's when I really dove deep into understanding commercial, fascinated by how it worked, understood, and found out syndications, and you can invest in these high quality, large apartment complexes along with other investors and operators. And it really piqued my interest in understanding this is a more scalable way to grow in the real estate space. And so I really doubled down on. Education, investing into some of these deals myself, getting into a mentorship program, going to UPenn Wharton Real Estate Analysis course. So really just doing everything I could to further educate myself, do underwriting. And it wasn't until 2023 when I realized I could start seven peak Capital, I always had a thought about it, but understanding that there's a business there that. I have exposure to a lot of these operators and these deals now, and there's a lot of people within my network that ask me how can I get started in real estate investing? How can I get exposure to some of these deals? What do these deals look like and how can I get started? And that's what we do today with Seven peak Capital. So we invest primarily in so far, most of our multi-family deals are in Texas with Dallas Waco looking at a Houston deal right now. And with strong operators in place, we have operator relationships where we primarily partner with them from the equity side that we do due diligence. We meet with them. We see deals come across our plate pretty often each week, and we really vet out the relationships, who's running the property, their portfolios, and our, it's just a property that we want to invest in. And so if it checks all the box and we do our deep due diligence with them. Then we decide to partner with them determine amount that we're gonna bring to the table from an investment standpoint, and then we bring it out to our greater investment team.

Steven Weinstock: 11:31

You mentioned you started seven Peak in 2023. Yes, correct. So what was your real estate career like between 2018 and 2023? You moved to New York. Are you still buying smaller properties in Pennsylvania? What's what's, what is 2019? What does 2021 look like?

Bryan Morris: 11:52

Yeah, great questions. So I moved to New York to really accelerate my W2 career. And to accelerate my earnings. I was still looking for properties in Pennsylvania at the time, being two states away. My family was still back there, but became a little bit more difficult. My thought and intention was to continue to build my own personal portfolio. But once I got into New York, started exponentially growing in my sales career and starting to make, a lot more money, that's when I started to really look into the syndication world. And between the 2018 and 2023 was again, diving into the education and the mastermind and then mentorship, and then really the Wharton School getting educated, and then investing myself personally in syndication deals as well as some private credit to understand how those worked, reporting distributions, and really invest in those deals first before I really started what is now Seven Peak and help others invest into these deals alongside of us.

Steven Weinstock: 12:50

Now seven peak Capital, you are I guess you're a fund, am I Correct? And you are raising money from other people in your network? Family, friends, business associates strangers, whoever knocks on your door. Yeah. And they are effectively investing in you, am I correct? Yeah. You could say that to some capacity, correct. The question is, when you come across a deal it's in Dallas, it's in Waco, it fits your buy box. Are you then taking that deal and telling your black book of investors, Hey, here's a deal. I really love it. I'm putting some of my own money in. What are your thoughts? Or are these investors already committed to bryan Morris, two seven peak? And, whatever happens, whichever, whatever the deal is we're already in.

Bryan Morris: 13:42

Yeah, great question. No, they're not already committed. They're part of our investor list. Generally every week through LinkedIn, I see about 15 to 20 new investor leads that I'll get on the call with. The inbound lead flow has been, is very positive through just leaning into LinkedIn this year as well. But just again, what you mentioned earlier, leveraging my business network in New York, family, friends, and everyone who knows that I've been investing in real estate. But that's essentially it. We strive ourselves on being as transparent as possible and as available as possible to our investor base and doing the upfront work to really unlock these opportunities for those people that are interested in getting into institutional high quality real estate deals and assets. Now we've met with operators and meet with operators continuously all the time. Understanding what's your portfolio look like what's your track record? How is it performing? How many units do you have under management? Where are your properties? We're going to a lot of events. We go to, three to four events around the country each year to really meet , in person and understand these. There's a couple operators here in New York that we're close with, that have events that we're actually going to next month. And so we really want to build on those relationships because the people that we work with and invest with us primarily are. High net worth W2 professionals that are busy, that are very good at their jobs, that make good money, that have a family at home and they simply just don't have the time to, to go out and find quality real estate deals. Or they live in New York and they can't go out their backyard and buy their own rental property or buy their own duplex and they just can't fit in their schedule with their family and their job that they're quite frankly, very good at and making a lot of money. So they're looking for opportunities to diversify into real estate, and that's where we can come in and help and, we pride ourselves in doing that upfront due diligence and try to bring forth the best opportunities to our investor base. And we try to get into about three to four multi-family deals per year. And then this private credit fund is now an open-ended credit fund where they can continuously invest in. And both strategies are a little bit different, but those are the two offerings that, that we primarily offer.

Steven Weinstock: 15:41

When you say a private credit fund, are you guys investing in debt or in the equity portion of the purchase.

Bryan Morris: 15:49

Great question. So it's debt we're lending. First position about 40 to 60% loan to value. Got

Steven Weinstock: 15:55

it. And with the private equity. With the debt, you're also working with operators lenders direct lenders who their businesses to find the borrowers, underwrite the borrowers, underwrite the deal. Make sure. All the i's are dotted, t's are crossed, and then you're coming in for a part of that loan,

Bryan Morris: 16:15

am I correct? Exactly. Yeah. So they're gonna originate the loan, right? They're going to, they have the systems in place essentially to originate and to lend out the money. And we provide capital within that fund where we're seeing the return, the interest return on that, and essentially acting like the bank within that debt fund, which is a bit of a different strategy than when it comes to the equity investments. These are primarily bridge loans, I'm gonna guess Yeah, they're short term, three to 36 a month, typically paid off in less than 12 months with eight to 15% type of interest rates or, yeah. We're seeing through our partner about 14 to 15% yield on that. Got it.

Steven Weinstock: 16:56

Got

Bryan Morris: 16:57

it.

Steven Weinstock: 16:57

Okay. When how are these deals structured on your end? Just to give an example, let's say somebody's coming to one of your partners, your operator partners, they need to borrow $15 million for a bridge loan. All the check boxes check good borrower, good background. Your operator partner needs to come up with $15 million. They reach out to all their investors. Seven Peak decides that we can come in for 500,000 or a million dollars of it. Does each investor of yours have a separate relationships now with your operator or is. Everybody coming into Seven Peak Capital and seven peak Capital is just writing one big check and the returns come that way as well.

Bryan Morris: 17:45

Exactly, yeah. It's a SPV, so everyone's coming into the seven peak capital and then we're writing the check to the operator. So for the example that you just use of the private credit fund, there's about $150 million in a across 63 loans within the fund that we're working with our partner. And so they continue to recycle the capital that's in there. I believe last month there was about $20 million of cash, and the rest is loaned out right now in, in different loans. But that's exactly right. We will go in and we will invest capital into the fund. They'll continue to originate loans and recycle that capital to provide us our returns. And then they're on a capital call structure right now. So they'll call capital from us and give us a, a date, 45 days in advance. We'll go out to our network and say, Hey, the next capital call is October 1st. If you would like to be part of this round, we need to have funds in by September 25th. So they reach out to us, they're interested. We sign the paperwork, the subscription agreement, and they get into the fund and they have exposure that way.

Steven Weinstock: 18:47

Now when someone borrows on a bridge loan, besides the 10 or 12 or 14% that they're paying on the interest rate, there's other fees. And I'm not talking about appraisal and environmental and all that. There are fees such as two points on the way in, sometimes a point on the way out. Does your network share in that, or is that strictly for the operators?

Bryan Morris: 19:11

That's a great question. That's strictly for the operators since they're doing the work on that. Side of things to originate the loans, to market and get the leads, quite frankly, for the loans. And then to write it and do the work. They're seeing those fees into their fund. The way ours is structured is we're doing, we do a 10% preferred return to our partners in the fund and then, there's a class of 60 40 split thereafter of profit sharing. So the investor will see 60% and then we'll see 40% thereafter on a performance basis. But no upfront fees, no a fees and no capital placement fees.

Steven Weinstock: 19:47

Okay. What about on the equity side? Besides a private credit fund? Are you investing as equity into deals and enjoying potentially some of the upside

Bryan Morris: 19:59

and tax benefits? That's exactly it. So everyone's excited about bonus depreciation being back. And so yes are the equity deals we typically, you'll see a seven to 8% preferred return and then an 80 20 split, right? Something similar to that where that's exactly it. We may be bringing a million to $2 million per deal into these equity deals. And sometimes, we negotiate COGP, or sometimes it'll be through a feeder fund structure. But our investors will get benefit and exposure into these deals. And one thing I didn't mention about the private credit fund with our operator, the benefit that our investors receive is not only exposure to an institutional quality fund been, audited by Deloitte the last two years, really high quality. They, the minimum check size to go directly to that operator's, a million dollars. So we're able to get our investors in who, might be writing $50,000 checks into a fund that's institutional quality and exposure for them, but they not, might not be, the family offices or the super high net worth that are writing the million dollar checks or more.

Steven Weinstock: 21:03

These funds are giving seven peak capital. A K one at the end of the year. An annual K one. Exactly. And then what are you doing for your investors? You have to, on your own, give individual investors a K one? Correct. Okay. So you are incurring some cost involved in operating this fund?

Bryan Morris: 21:23

Yeah. Yeah. There's, we have a portal, we have our investor portal. We process K ones with our CPA. So yeah, there's some ongoing costs. And yeah, we. We don't charge any fees, like I mentioned upfront, but the profit sharing split thereafter, the preferred return is where we make some of our profits.

Steven Weinstock: 21:43

Now you've been with Salesforce for quite some time. Salesforce is one of the largest companies out there in the world very successful. Do you feel that being at Salesforce, working your W2 job, and I'm not talking about necessarily the amount of money that you're earning. Do you feel that this helps you with your network of investors? Meaning if you were to give it up, do you think you could raise more money from investors and do more deals? Or the fact that you have access to coworkers who are making, I guess just as much money as you are, who are very busy, who want to invest. Does it hurt you by staying at Salesforce or does it help you by staying at Salesforce?

Bryan Morris: 22:31

Yeah, it's a great question. Salesforce has been an amazing company. I've been here for three and a half years, and I have a great team of coworkers and colleagues, and there's 70,000 plus employees at Salesforce, and I work in the New York office. So I think very much so that it helps me, I. Share what I'm doing on LinkedIn openly. I post five times a week. I love to share my story, of just all the lessons I've learned over the last 10 years. Good, bad, indifferent. What I would've done differently, what I would've doubled down on or, what's done very well for me. And so a lot of people within my network and within Salesforce that I'm connected with, have come to me on Slack, have asked me questions and say, Hey, I like, I've seen your posts about real estate investing and it's really peaking my interest and I'm really interested. I'm a big proponent on you don't have to quit your job until you really feel like that's something that you want to do. If you can balance both like I mentioned earlier, I work with people that are very successful at what they do, very good at what they do, and they might love it, right? They may love, and it might not just be in tech, it could be your attorney or dentist, your doctor, but they do very. They do very well at what they do, but they want exposure to real estate. They just don't have the time. And when they do have the time, they don't wanna take it away from their family'cause they wanna go home and actually relax and spend time with their kids. So that's where we fit into the mold is we have relationships, we have a Rolodex of operators and partners that we work with, that we can bring them deals every quarter, maybe every month that we see or we wanna partner on. And I think having the relationship and the network within Salesforce and the W2 world that only allows. Me to bring more contacts into our investor network but also allows me to continue to fund my own investments, right? And make a good earnings in Salesforce continue to grow what we invest in with Seven peak Capital.

Steven Weinstock: 24:15

Why do so many people out there always talk about leaving their W2 in order to get into real estate? Now, we could say that maybe their W2 is paying $70,000 a year. And by default, they hate their job. So if they could replace the 70,000 with 70,000 of passive income, it's a real win. Yep. Besides earning nice money I'm assuming you really love the job.

Bryan Morris: 24:43

Yeah. Salesforce again has been amazing, right? The the mix, the coworkers the people I'm surrounded with, their, the culture, everything about it I couldn't speak more highly about. And then, outside of the week to week, day-to-day stuff, like I have the autonomy, the flexibility to meet with operators, do real estate and review real estate deals. I'm in office a few days a week. I'm working from home a few days a week, and I post on LinkedIn, like I mentioned about building seven peak capital. That's essentially what I've been posting about on LinkedIn since January for the last eight straight months, and. No one in Salesforce has mentioned anything. There are quite honestly they've been, coming to me and saying this is awesome. I love to see what you're doing outside of Salesforce and you're building this real estate firm and, investment company and you're getting into deals. And so I've gotten a lot of positive feedback. So yeah, Salesforce has been very supportive and great company to work for while I continue to invest. The founder

Steven Weinstock: 25:39

of Salesforce, that's Mark Benioff. Am I pronouncing that correctly? Yes, sir. Yep. Mark Benioff. Has he reached out or, I guess not. Yeah, he's not, but he's he's next on the list to get onto the investor list. But I think he's doing pretty well for himself. He self-made billionaire, owns probably about half of the big island in Hawaii. Flies on his privates

Bryan Morris: 25:58

jet. No, he's been doing very well for himself and, I've met him once, but. He's, he started the company in 99 in his San Francisco apartment, and he still runs it to this day, so says a lot about him already.

Steven Weinstock: 26:11

So why is he investing in Time Magazine? Did he buy that right? I guess it must be a vanity project, yeah. He has a couple of, a hundred million to set aside for fun and keeps him in the news. A smaller Washington Post game. But alright. We won't talk too much about him. Yeah. But he's definitely impressive. But every time I see that they buy these companies. I figure maybe it's just a tax loss and they get to have some fun at the same time. But okay, so he has not invested in seven peak Capital just yet? No, he's on the list. Okay. But if he does get him to post on LinkedIn and to tag you That's right. Bring some inbound leads, that'd be nice. Were you investing in multifamily deals before you started Seven Peak?

Bryan Morris: 26:56

Yes. Yep, we got it.

Steven Weinstock: 27:00

How did you how'd those come

Bryan Morris: 27:01

about? I'm still holding a lot of my investments. They're doing well, luckily. I know there's a lot of tough times for people that got into deals, specifically 20 20, 20 21 with low interest rates. And, cap rates were super, compressed and people were paying very high valuations for properties. Rent gross with through the roof, with, COVID migrations and, 20% year over year in some of these markets in Texas and the Sunbelt. And so you hear about all those. Luckily the investments that I got into have done well and they're performing well. And I look forward to them going full cycle. But that was all part of like me investing into these deals to understand operators, track record investments, distributions, K ones, right? And getting into those deals myself and starting seven peak Capital and understanding the aspect of it behind, the underwriting, the, an analysis and the educational piece. That's what I wanted to bring forth to my investors to understand what they're getting into as well. If

Steven Weinstock: 28:03

somebody came over to you and said, Hey, I have 50 grand. I want to get into real estate. I have a good job, but I have 50 grand, so I just buy. SPY and watch it grow. Should I just buy a real estate REIT and enjoy some of the dividends, but I want to be in it. I want to have fun. I wanna get some depreciation. What's the first step that somebody could do?

Bryan Morris: 28:27

Yeah, great question. And I actually love this question. I get a lot when I first meet with investors that are just poking around. You know what I ask them first, honestly is you have $50,000. Do you want to be on the active side of real estate investing? Because a lot of people they first talk to, they think that I might help them buy a single family house or we might help them get started or. They don't really know, how we can help yet. They're like, Hey, I wanna get, start, get invested into real estate. So I'm like, do you wanna be on the active side or the passive side? That's one of the first questions I ask, and being active is, Hey, looking for a rental property, finding and putting a down payment on that property. Finding a tenant, finding a way to manage it., If you're in a market that you can do that or looking outta market. Now, if you don't want to do that, I would recommend doing due diligence and learning what else is out there from a private placement standpoint, which a lot of these multifamily equity deals, and there's other asset classes, right? There's self storage, there's RV parks, there's mobile home, there's industrial, there's retail, there's all types of commercial real estate that people can invest in and see depreciation benefits, tax benefits when it comes along with that. If they don't wanna go the active side and that's not feasible, they're in a market that doesn't make sense or they just don't have the time, then I say, let's start educating and looking at what options you do have from a passive standpoint. And so go ahead. That's generally the process that I take the investors on to understand like what their options are from there. And then we continue the conversation around more passive investing into commercial assets.

Steven Weinstock: 29:57

When you're investing in. Debt so you're not on the equity side. Are you still locked into certain markets in Texas or, once you're investing in first lien positions on property, as long as the LTVs are safe, are you more open to different areas and different locations? Definitely,

Bryan Morris: 30:15

yeah. We've lent within the fund to 17 different states. Got it. All multi-family. No, it's a mix. Multifamily has the biggest mix within the fund, but it's about 25%.

Steven Weinstock: 30:29

Anything in New York City? Not New York, no. Are you afraid of New York or you just haven't had the opportunity?

Bryan Morris: 30:37

Don't think we're afraid of New York, but we want to invest in states that, are friendly enough where, foreclosure laws are in our favor. So if we are first position, which we are, 40 to 60% is a typical loan to value range. So for example, if there's a $10 million property that they're looking for a 12 month bridge loan on, and we give them $5 million as a first position and they can't pay us back. Now outta the 64 loans, there's been three that have, come up to a position where they were going into default. The one we actually took back and resold for an 18% profit. The other two were refinanced. So we're in a position where we do have an equity buffer that if we were to take the property back that we own now an asset that, we had buffer in due to the value. But there's a process, right? A, a foreclosure process, and we wanna ensure that is a swift process that we can go through if necessary. Prior to that, there's a deep due diligence process of who we're lending to. And I think that's a reason why there's been such a low amount of, delinquency, that we have very much confidence in our borrowers that they can pay us back at the rate and then, move on to more long-term financing for themselves.

Steven Weinstock: 31:47

Just to back up you mentioned a deal that didn't go as planned. You guys had to take back the property. When you say an 18% profit, you're talking about a profit above your loan. Not on the value that. The property was appraised for upfront. Am I correct?

Bryan Morris: 32:02

Exactly, yeah. And

Steven Weinstock: 32:04

are you selling the actual property or are you selling the note? What are you doing?

Bryan Morris: 32:08

Yeah, that property specifically was a construction loan for a residential property in New Jersey. So I think it was 1.2 or 1.4 million. But the property was valued, significantly higher that we took the property back and it was sold in 45 days. And so we got, return on our capital invested.

Steven Weinstock: 32:27

Got it. And this is a property that was still in the middle of the development stage. So you, the bank is not, your operator is not actually collecting rent for those 45 days and dealing with tenants, am I correct? Correct. Got it. Okay. So that's not bad. The reason I ask you about New York City is I always say I'm afraid of New York and I think I need to just add a caveat where I'm afraid of being a landlord in New York. Yeah. Holding your first position lean, especially with lots of protective equity a 40% or 50% LTV in New York. I think I'm okay with that, right? Because New York has, great value lots of buyers willing to buy it. But I just don't wanna be a landlord here in New York. And I'm born and raised here in Brooklyn. I grew up here. I still live here. My office is here. I'm sitting in Brooklyn right now. For the most part, I don't invest in New York City. I own my house. I own my office building. I happen to own another piece of property just nearby my house. But I've been out of New York since 06 and I, I started in New Jersey in oh three. In oh one. In oh three I started buying some smaller properties in New York. And while I did well with the appreciation. But being the landlord was just so tough. And this is way before all these new laws came with 2019. And all that. You have what's called, what we call them professional tenants. Yeah. Who can live in a property, not pay rent for two years. And then still get, almost paid off to leave, get their moving expenses cash for keys. It, it hasn't happened to me, but I've seen it happen many times across the board. And I had some Section eight tenants, and I had tenants just to spite me, even though they weren't pain. It was section eight pain. They would call in a complaint just about every couple of weeks just to. Have the Section eight check stop coming, and they would call for, some chip paint or the screen didn't close and they would strategically call like every few weeks instead of all in one shot. They would do it every few weeks. And that to me was the biggest turnoff. Not that New Jersey is so much better, but compared to New York, it's, tons better. Yeah in parts of New Jersey you could have a tenant not pay rent and, within three months, they're out. These days I'm buying multifamily in the Cleveland suburbs and in Louisville, Kentucky which I guess these are considered red states. Although the cities itself are considered maybe a little blue. But compared to New York, it's it's like the wild west and it's great, but

Bryan Morris: 35:09

yeah.

Steven Weinstock: 35:10

Being a landlord is just a real tough business and I understand why you're investing in private credit because you don't have to care if the toilet flushes or the person pays rent. It's, I'm the bank, pay me and that's it. And I guess you give up some of the upside, right? But, the operational end. Just the mind space is really just clear, the payment is due, you don't care what happens. I don't care if you collect rent. I don't care if your construction is taking longer than it's supposed to. My, my payment is due on the first of the month, and that's it.

Bryan Morris: 35:48

That's exactly it. Yeah. And it's a different strategy than equity for sure. When it comes to, owning and operating is a whole different piece in itself. The real job starts is when you close on the property and you have to operate it right. And being in real estate, I'm sure you know that, but that's very true on the debt and private credit side is. Being the bank, your first position, if they don't pay you, you take it back and, you do give up the equity upside and the total appreciation, but you have this fixed income that you know, you're set to to earn based on your position within that loan. So I think there's a good mix of both depending on what your strategy is. If you. You don't want to diversify? I have holdings in both, and I think it's important because, I feel like within my portfolio, I still want to diversify into a handful of equity deals every year, right? To get those depreciation benefits to offset that, rental income and passive income that I'm receiving, but also I want that credit debt. Income that is consistent, right? That, like you said, you don't have to worry about, right? The inconsistencies and the management operational headaches that could come along with that. Again, two different strategies, but I think it's important to diversify into both if you can.

Steven Weinstock: 37:04

bryan, what do you do for fun in Chelsea.

Bryan Morris: 37:07

Yeah, I like to get out golfing when I can, but it's not the easiest when I live in New York. But my wife, Jenna and I have been in New York since 2018 and in Chelsea, specifically since COVID. So we did live through COVID through the whole pandemic and I'm sure you did too, being in New Yorker. We love to go to the restaurants in New York. It's some of the best dining you can see. I like to run a lot. I'm training for the New York City Marathon, actually in New York November 7th November 2nd this year. So it's gonna be my first time running it, but I'm super excited about it. I I played collegiately football and baseball. I played a little bit of professional arena football after college. I've always been, wanting to move, work out and keep up with that now by golfing and running and working out there in the week.

Steven Weinstock: 37:49

I don't play golf, but I live in Brooklyn and less than a half a mile from my house is a golf course. And people are shocked when I tell them yes, there's a golf course less than a half a mile from where I live. I live in the Marine Park section of Brooklyn. There's I guess on Flatbush Avenue there's a golf course I think it's called a Marine Park golf course, I think. Yes. I live literally less than a half a mile away. I think I went there once and it was just for the driving range, not for the actual golfing. But I don't know, maybe one day I'll I'll take up golf, but for now I guess I'll just work on podcasting. Yeah,

Bryan Morris: 38:23

podcasting. And then once you retire fully and give up the real estate and you're living on your passive income, then you can go move on a golf course and play golf every day.

Steven Weinstock: 38:32

bryan, I had a great time talking to you. I guess you're considered a fellow New Yorker, even though what you're born and raised in pa Harrisburg slash Bethlehem. Yes. But you made it all the way to New York living in Chelsea. Chelsea is the area where the TV show friends took place. Am I correct or am I wrong on that?

Bryan Morris: 38:49

Ask my wife, because I think she's seen every single episode that they've ever taped. But yes, I think so. They have like on Flatiron 23rd and park or somewhere there on Flatiron, they have a whole Chelsea or friends experience and everything. Yeah. And then there's Central perk, I think was the coffee shop that they named it.

Steven Weinstock: 39:07

Yep.

Bryan Morris: 39:07

That's there's like one.

Steven Weinstock: 39:09

Over there,

Bryan Morris: 39:09

like an exhibit close by. So yes I think Chelsea is the spot for that.

Steven Weinstock: 39:13

Got it. Yeah, I used to work right near the Flatiron building back in 98, till I guess 2000. I was working on Madison and 26 I was working in the advertising business. I was working in online advertising back in 98. So we're talking pre google. Where ads back then was just these big banner ads on the homepage of Yahoo and Excite and lycos. You might be a little too younger to remember those. Alta vista.com and all these companies that are really no longer. But yeah, it's a great area. We're glad to have you in New York. bryan tell everybody tell my audience how they could reach out to you. I'll put it in the show notes, but just, give your phone number, your address, your whatever you wanna share. Social security number? Social, yeah. Yeah, sure.

Bryan Morris: 40:01

So the best way to find me online would be my LinkedIn bryan Morris. You can go to seven peak capital.com. You can send me an email at Goethals BRYA n@sevenpeakcapital.com, or you can reach out to me personally. My cell phone's nine zero eight. 2, 2, 7, 6, 8, 6, 6. Feel free to shoot me a call, shoot me a text, an email. I'm always happy to talk to any current investors that are looking to diversify or people that are looking to get into the business where I can help, maybe offer some guidance or some advice.

Steven Weinstock: 40:31

Okay, bryan, thank you very much. I appreciate you coming on. I'm gonna put everything you mentioned in the show notes. That's it for today's episode of The Wealth Clock with Steven Goethals. If you enjoyed this conversation, make sure to follow the show so you don't miss the next one. As always, you could find my contact info in the show notes and on my LinkedIn profile. Thank you for listening, bryan. Thank you so much. Thanks, Steven.